Bitcoin Trading Tips for 2021

Bitcoin has totally exploded in value over the past year, and it makes for great trading opportunities. That said, trading BTC is not easy, which is why right now we will provide you with some really important Bitcoin trading tips, so you can start 2021 off with a bang.

Become a Pro Technical Analyst

When it comes to successful Bitcoin trading, you absolutely need to master technical analysis, or at least become very proficient at it. You need to become a master of reading charts, analyzing charts, looking at support and resistance, analyzing various types of indicators and oscillators, and all of that other fun stuff. The point here is that Bitcoin is not one of your regular assets, such as in Forex.

It is an outlier, and this means that there is not much fundamental analysis that you can rely on to predict future price movements. In order to be a profitable Bitcoin trader, technical analysis is a skill that you must develop. The good thing about technical analysis is that it can be applied to all kinds of trading, whether cryptocurrency, Forex, commodities, and everything in between.

Understand the Blockchain

BTC and cryptocurrencies in general are built on this fundamental concept or construct that is the Bitcoin, a virtual list or chain of records. This is a continuously growing and secure list of records, also known as blocks.

These serve as a public ledger or record as to what has previously happened with cryptocurrencies, such as BTC. The cool thing about the blockchain is that it eliminates the need for intermediaries such as banks, entities that love taking money from traders.

The blockchain is quite technical and complex, and understanding it is not easy. Now, you don’t have to understand it 100%, especially not the super technical stuff. However, having a basic understanding of what the blockchain is and how it functions is quite important in terms of Bitcoin trading tips.

Keep News in Mind

In terms of Bitcoin trading tips, one of the best ones for you to follow is to always keep the news in mind. Yes, it is possible to analyze news developments from around the world to try and determine what the value of BTC and altcoins will do in the future.

For instance, the current state of insecurity regarding the US presidential inauguration appears to have led to an uncertainty in various fiat currencies such as the USD. Due to the fact that many investors and traders are shying away from many fiat currencies, they are looking for other investment and trading opportunities, with Bitcoin and crypto in general being at the forefront.

The cryptocurrency market just reached $1 trillion USD in value, and it’s all because people are turning to crypto as a safer alternative. The point here is that if you keep an eye on important news developments from around the world, especially from the big economic players, you might get a good idea of how those developments will affect cryptocurrency prices.

Start Small & Manage Money

As a newbie, something that you absolutely must do when it comes to Bitcoin and crypto trading is to start small. Folks, there is no point in trading Bitcoin and altcoins with a ton of cash if it is your first time doing so. The fact of the matter is that as a beginner, you are bound to lose some trades. It happens. Loss is an inherent part of trading and there is no avoiding it, at least to a certain degree.

Therefore, as a beginner, one of the best Bitcoin trading tips you can follow is to start with just a few hundred dollars. You can practice your trading and investing skills this way, while not risking too much money.

As you get better at spotting good potential trades, and your win to loss ratio improves, you can slowly start to increase investment and trading amounts. Moreover, you also need to make sure to manage your money properly, with the rule of thumb here being that you never want to trade or invest with money that you cannot afford to lose.

Don’t gamble your mortgage payment because you think that a trade is a sure-fire bet. There is never such a thing as a sure-fire bet, which is why it is called a bet. Remember, trading is like educated gambling, but things can and do go wrong, so never risk money you are not comfortable losing.

Pace Yourself

Another big-time Bitcoin trading tip for 2021 is to pace yourself. Yes, the value of BTC and of many altcoins are currently skyrocketing. This means that there are of course many good investment and trading opportunities for people around the world. Generally speaking, markets that are increasing in value, especially at such a fast and huge rate, make for great money-making opportunities.

That said, if you overwhelm yourself, you invest too much at once, and you trade all day long, you are bound to get fatigued and to make mistakes. Of course, pacing yourself is super important as a newbie, because you don’t want to burn yourself out. Even seasoned veteran traders can only do so much in a single day.

Master Some Solid Trading Strategies

The next of our Bitcoin trading tips for newbies is to master some good trading strategies. Folks, no matter if you are trading cryptocurrencies, Forex, or anything else, you need to have some good strategies in your arsenal.

There is not a single successful trader out there who doesn’t use tested and proven strategies. In other words, you cannot trade blindly or emotionally. Placing trades on signals that just look good, or ones that you have a gut feeling about, is not going to get you anywhere.

Start by deciding what kind of trading you want to engage in, such as swing trading, scalping, day trading, or passive trading. You can then also decide if you want to engage in HODling, hedging, trend trading, or breakout trading. The bottom line here is that having some good trading strategies to choose from will exponentially increase your chances of success when trading Bitcoin and altcoins.

Keep it Diverse

One of the major market trading and investing rules that every good trader follows is that of diversification. In terms of diversification, you might be most familiar with it in relation to the stock market. People always say to diversify your stocks, or in other words, buy many different kinds of stocks.

This way, if one stock tanks, you will have others to make up for that loss. It’s never a good idea to put all of your marbles in one basket. The same concept can be applied for people who trade with or invest in Bitcoin and altcoins.

If you put all of your money into one type of cryptocurrency, and it goes downhill, you will suffer huge losses. So, try buying or trading with multiple crypto coins, so if one tanks, the others are still there to save your skin.

Always Use Stop Losses

In terms of important Bitcoin trading tips, something you always need to do is to use stop losses, and the more averse to risk you are, the tighter those stop losses need to be. As a newbie, you may want to set your stop losses as high as 90% or even 95%.

In other words, this means that if you lose 10% or 5% of your money, the stop loss will automatically close out the trade and prevent you from losing the rest of the money. Now, where you want to set your stop losses is up to you, but that said, it is wise to do a bit of research on the matter to find out what ideal stop loss levels are for various types of trading.

Beware of Leverage

Many people who don’t have much money to trade with end up leveraging their trades. This means that, for example, you could leverage a trade by a factor of 10 to 1. This means that you could invest only $100 into a trade, but trade with $1,000 worth of money. Now, if you win the trade, it means you automatically make 10 times the amount in profits you would have made if you didn’t leverage the trade. However, it’s also very dangerous, because if you lose the trade, you end up being on the hook for the full amount. Therefore, as a newbie Bitcoin trader, our tip to you would be to stay away from leveraging altogether, at least until you get a solid grasp on trading.

Trading vs Buying

Our other Bitcoin trading tip for you to consider is whether you want to just speculate on its price, or in other words, trade Bitcoin, or if you want to actually buy it and hold onto it. Both have their pros and cons, so we’d recommend looking into this a bit more.